# TVM - TVM Problems 1 A company's 2005 sales were \$100...

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TVM Problems 1. A company’s 2005 sales were \$100 million. If sales grow at 8% per year compounded annually, how large will they be 10 years later, in 2015, in millions? PV = 100 N = 10 I/Y = 8 Answer FV = 215.8925 million 2. How much would \$1, growing at 5% per year compounded annually, be worth after 100 years? PV = 1 I/Y = 5 N = 100 Answer FV = 131.50 3. You want to buy a condo 5 years from now, and you plan to save \$3,000 per year, beginning one year from today. You will deposit the money in an account that pays 6% interest compounded annually. How much will you have just after you make the 5th deposit, 5 years from now? Set calculator for ordinary annuity PMT = 3000 N = 5 I/Y = 6 Answer FV = 16,911.28

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4. Your father is about to retire, and he wants to buy an annuity that will provide him with \$50,000 of income per year for 20 years, beginning a year from today. The going rate on such annuities is 6% interest compounded annually. How much would it cost him to buy such an annuity today? Set calculator for ordinary annuity PMT = 50000 N = 20 I/Y = 6 Answer PV = 573,496.06 5. Your girlfriend just won the Power Ball lottery. She has the choice of \$10,000,000 today or a 30-year annuity of \$500,000, with the first payment coming today. What rate of return is built into the annuity? Set calculator for annuity due
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TVM - TVM Problems 1 A company's 2005 sales were \$100...

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